Costco's packaging makeover revealed

The company’s revamped club store packaging yields cosmetics with an environmentally friendly bent—with more iterations on the way.

By Rick Lingle, Technical and RFID Editor

Economically functional packaging has long been the foundation of club store packaging. Earlier this year Costco added environmentally friendly into its club store packaging mix.

The club store chain which operates nearly 350 warehouse stores in the United States is replacing plastic clamshell packs with paperboard-blister hybrid packages. This new packaging comprises printed paperboard and RPET (recycled polyester) thermoforms.

First to receive the eco-friendly packaging makeover starting in February 2006 is a co-branded line of 22 Kirkland Signature by Borghese cosmetic products.

“The idea was to convert our vinyl clamshell packaging into something that would minimize the amount of plastic used” explains Scott Carnie general manager of Costco Wholesale Industries’ eastern packaging facility in Monroe NJ. The products are thermoformed and packaged at two plants one in Monroe (see sidebar below) and at a sister plant in National City CA.

Card Pak offset-prints the SBS in six colors plus a heat-resistant coating. There’s also other aspects to the paperboard that Costco considers crucial. “Card Pak is currently our sole source for the SBS” says Carnie. “It has been extremely professional and service oriented.”

Costco had been transitioning out of PVC into PET a step that Carnie felt was in the right direction but not a solution.

“We had no way to reclaim those packages so we weren’t getting anywhere environmentally speaking” he says. “And with consumer complaints related to the sharp edges after cutting open plastic clamshells we looked at ways to display our products in a packaging format similar in size to what we had been using but changing from all plastic packaging to as little plastic as possible.”

The product is secured within two blister halves. The blister halves are sealed between two SBS cards which are sealed to each other along the perimeter. A die-cut E-flute sheet placed between the SBS cards provides rigidity says Carnie. The packaging was designed internally with input from Borghese Carnie says.

The materials selection centers on factors other than environmental friendliness alone. “We want to use the use the best possible materials available for an upscale look” Carnie says. That upscale aura extends to the in-store presentation—the Borghese products are merchandised in a special kiosk that’s relatively new for Costco he adds. Costco Wholesale operations manager Mark Willis points out that the card packs fit into modular trays for kiosk display.

While other efforts have moved into combination corrugated-blister packs (see packworld.com/go/c161) Carnie says “We wanted the clean look of SBS.”

Package benefits

Carnie lists the packaging’s considerable benefits:

• The size of the format will help Costco with inventory control; according to its 2005 annual report Costco already boasts a shrink rate of less than 0.2% which the retailer believes is the lowest in the industry. Willis says the carded packs provide a measure of security and tamper-evidence. “Once they get the product home they can cut it open.”

• More environmentally friendly—a reduction in polymers used yet achieves all of same shelf impact of previous plastic clamshell packaging. “This has reduced the amount of plastic by 50 to 80 percent” Carnie claims.

• Due to the package’s strength Costco can increase the number of layers and product count on pallets versus clamshell packs. “Distribution considerations have been very much improved with this format” says Carnie.

• Shelf impact—“This format provides a nice presentation of product and information—a lot of pop for a warehouse club package” says Carnie.

• The double-blister packaged products are “isometric” (see side view picture on page 82) to provide a well-balanced look and weight that also helps keep the packs upright when trayed.

• The format is flexible and customizable and permits Costco to readily change or upgrade packaging components; for example Carnie says they will consider using bioplastics in the future.

• Edges are sealed completely around the perimeter to prevent moisture absorption in humid climates that could pose a problem to corrugated packages with exposed edges.

Carnie says they have developed two sizes of SBS cards for the planned introduction of the 22 Borghese products 71⁄2”x91⁄2” and 9x11’’ with tooling for four other size formats.

Carnie explains that the packaging reflects the philosophy of Costco chief executive officer Jim Sinegal. Sinegal underscores this initiative with a constant drive for the best product presentation in the industry and the never-ending need to reinvent and improve the standard with every aspect possible. Carnie also credits the great support and encouragement from senior management of Costco’s Eastern Packaging division to test challenge and present new concepts. Carnie points out that the artwork was completed for the entire line of 22 products equipment was engineered and installed materials were specified and procured and product appeared in initial test rollout at 35 locations all in a span of 16 weeks.

The packaging format remains a work in progress Carnie says as they look to improve on what is already a pretty impressive format. He anticipates future iterations to use environmentally friendly materials with tear-resistant protection for certain products.

“The idea is to continue down the road to recycled and recyclable and biodegradeable or compostable” Carnie concludes. With Costco’s production and packaging technology flexibility the company is positioned to stay a step or two ahead of the competition.